Your Mortgage : Know Legal Rights if Loan Dispute Arises
If you’re one of the millions of Americans who have refinanced or taken out a new home mortgage recently, do you know your federal legal rights vis-a-vis your lender?
Are you aware that if you complain to your mortgage company in any manner except that prescribed by federal law, you could miss out on some important federal consumer protections? And when you do complain or make an inquiry to your mortgage lender or loan servicer, do you know how long the firm legally has to respond to you, and then to solve your problem?
If these questions are drawing blanks, join the crowd. Federal officials familiar with mortgage borrower protections say only a tiny fraction of consumers are actually aware of their legal rights when disputes arise with the companies who provide or administer their home loans.
To make sure you’ve got the facts when you need them, here’s a quick overview. Tuck it into your mortgage loan document file, just in case a problem arises sometime down the road.
The most critical federal protection you have in your dealings with your lender or mortgage servicer is a mandatory deadline schedule for handling your problems. Provided you make your complaint or inquiry in the proper manner, your lender or servicer may be subject to federal civil penalties if it fails to “acknowledge” your communication in writing within 20 business days of first receiving it, and to correct or clarify the problem within 60 business days of initial receipt.
But what’s the proper manner to make a complaint or inquiry? That’s a key point. Federal “complaint resolution” deadlines are only in effect when you send a “qualified written request” to the company servicing your loan. That servicer may be the original lender who provided you the mortgage, or a firm who subsequently purchased the rights to service your loan from the lender.
A qualified written request, according to federal regulations, cannot be a note scribbled on your monthly payment coupon. It has to be a separate, distinct “correspondence” from you to the lender or servicer that includes your name, your account number, and your inquiry or complaint.
Say, for example, that you have some disagreements about the way your loan’s escrow account has been calculated or administered. You can telephone the lender or servicer to get an answer or resolution. But if you don’t like the answer you get--or you get no action or resolution--the only way to ensure coverage under the 20/60-day federal consumer protection rules is for you to send a formal written request, including your account number and name.
If your dispute with the lender or servicer involves an allegation of unpaid or overdue funds, invoking the 20/60-day rule can give you an added blanket of protection: During the 60 business-day period beginning with the lender’s receipt of your “qualified written request,” the company is prohibited from informing credit bureaus about your alleged non-payment. If you’re not covered by the rule, by contrast, your lender could tell anyone checking on your credit that you’re delinquent on your mortgage--even if it turns out later that you weren’t.
Other important legal rights you have in your ongoing dealings with your lender or mortgage servicer:
You are entitled to advance, written notice of any transfer of your loan servicing account to another firm. Your lender, in other words, cannot simply write or call you one day and say, by the way, we sold your loan to Ajax Mortgage last month. Send all your payments to Ajax, not us. Goodby.
Instead, you must receive federally prescribed notifications in writing from both your current lender and the new firm that will be handling the loan. The latest--repeat, latest--date you as a home owner can be informed of a servicing transfer is 15 days before the date the successor firm is scheduled to take over the loan. The advance notice must give you the name, address and toll-free servicing information number of the new firm.
No later than 15 days after the transfer occurs, the new servicer must contact you in writing and establish procedures for the new relationship. But here’s a crucial point: For the first 60 days after your loan has been transferred, you may not be hit with late penalties for any mortgage payment you send on time to the first servicer, rather than to the new firm. You are held harmless, in other words, for the innocent mistake of getting confused about where to send your payment.
Of course, if your mistake is not so innocent, and you send your payment in late to the wrong place, don’t look to federal law to shield you from lender penalties. You owe the money, 60-day rule or no.
Distributed by the Washington Post Writers Group.
